Indonesia’s National Bureau of Statistics (BPS) announced on Thursday that the inflation rate for May was 3.55% per year.

This compares to 3.47% in April. “Inflation is rising because the government has a policy to allow airlines to adjust production costs and recently raise fuel prices for Pertamax,” BPS President Margo Yuvono told a news conference.

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Bank of Indonesia Governor Perry Varjiyo told the House of Representatives on Wednesday that he expects inflation to exceed the 4% target in the coming months due to rising energy and food prices.
The Bank of Indonesia is optimistic that inflation will return to the 2-4% target range by 2023.

The Bank of Indonesia (BI) announced a rapid increase in RRR and ordered the bank to withdraw 7.5% of its reserves in July and 9% in September. Compared to the previously published BI policy trajectory, BI has shown a steady increase in RRR from 3.5% to 6.5% in September this year.

Warjiyo said inflation forecasts “reduce the need to respond with interest rates, as do other central banks”.

“Accelerating liquidity recovery is a step towards helping BI continue to sustain corporate growth and lending while remaining stable,” he told an online news conference.